As 24 homeowners at Melody Ranch Townhomes confront a “catastrophic” roof failure, town and county officials agreed Monday to provide construction loans to help fix the problem.
“They made a decision that reinforces their mission of trying to stabilize our community by providing healthy housing solutions,” homeowner Brian Modena said. “I think we’re in a place where people aren’t going to get kicked out on the street, and we’ll be on a path to have safe roofs for all our homeowners.”
Built south of town in 1996 and 1998, the six fourplexes included deed restrictions meant to keep prices down so the homes would remain affordable to local workers, but sunset clauses meant many of those restrictions expired after 20 years of ownership. Currently, eight units are permanently deed restricted as affordable, 13 are now free-market and three more are affordable but will soon be free-market.
The units’ roofs are caving in. The HOA’s insurance won’t cover faulty construction, and the roofing company is out of business. The Housing Department has claimed it legally has no liability because it didn’t develop the buildings. The units — some free-market, some restricted affordable — share roofs, tying their construction projects together.
The roof replacement is estimated to cost as much as $157,000 per unit and require owners to move out for three months of construction. Free-market owners normally can finance the repairs against the equity in their home.
But because the Housing Department’s deed restrictions on the eight affordable-restricted units hold down their value, the eight affordable homeowners would struggle to leverage the value of their homes to finance the roof repair. Possible foreclosure and upside-down debt loomed.
In June, town and county elected officials agreed to increase the value of the price-restricted affordable units in order to allow homeowners to finance the repairs. They voted to raise the homes’ value to the cost of constructing the roofs, up to $160,000 each. The units also would have been designated “workforce” rather than affordable, meaning they must be occupied by full-time local workers, instead of placing an income limit on the next home buyer.
But challenges in securing financing sent homeowners back to the town and county for help. Banks wouldn’t invest in the project.
“The terms the bank stipulated were so unfavorable that we as an HOA could not get the majority of homeowners to vote on it,” Modena said. “It would’ve resulted in many homeowners not being able to afford the project and essentially being thrown out on the street.”
During a Monday vote the town and county unanimously agreed that the eight homes restricted as affordable can obtain a loan from the Housing Department to cover the roof costs, to be repaid when the roof has been fixed.
If owners can’t afford to take on that debt, they can defer paying back the $160,000 loan until they sell their unit, as long as the unit remains price-restricted as affordable.
The department will also offer to buy deed restrictions on free-market homes to help those owners pay for the roof fix, a move that could increase the county’s affordable housing stock. It will pay $100,000 for a workforce restriction and $160,000 for a price-restricted affordable restriction.
“It’s a difficult situation,” Town Councilor Jim Stanford said. “Obviously, investing in affordability and retaining these homes as affordable is worthwhile. Maintaining these community members is important, and it costs money to do so.”
Attorneys will iron out the details of the loan agreement, such as interest rates and repayment schedules.
“My interest is every homeowner gets a safe and secure roof over their head,” Commissioner Mark Barron said.
The homeowners association will also have to vote to approve a special assessment to pay to fix the roofs.